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Depends on whose parts

For $500, he should be quoting actual BMW parts, not aftermarket. I just bought Sachs (OEM) struts from Bav Auto for $119 ea. To ensure a good ride, the "etc." should include new upper and lower rubber spring pads, bump stops and dust boots. Labor quote seems very good to me: I can't do struts in one hour per side, that's for sure.
'03 525i Sapphire Blu/Grey, SP, Nav
'02 325it Orient Blu./Grey, SP, Nav
'98 323is Arctic Sil./Blk, SP
'95 M3 Cosmos Blk./Blk

Wow, I just realized thats just the front struts >

That is a bit pricey. I read struts/shocks and assumed thats what you meant. If it is for front struts (plus pads and strut bearing) then its a bit high. It should be 3 hours labor plus about $300 in parts for the front. Check autohausaz.com for parts prices. Add 15% for fair indie prices. If it was within $100 of that I'd say its fair.

Rear parts are cheaper but should be 2hrs per side.

If you cant get a better quote than its not horrible. I could be better than a dealer quote, but not by much if at all.